WEBVTT 00:00:00.000 --> 00:00:03.920 You might think the biggest breakup in tech history was Bill and Melinda Gates, 00:00:03.920 --> 00:00:09.280 but the one we just saw between EVGA and NVIDIA has to be in the top five. 00:00:09.280 --> 00:00:14.000 EVGA recently announced that they would completely stop producing and selling 00:00:14.000 --> 00:00:20.400 NVIDIA-based graphics cards. Huge news, considering EVGA owned 40% of the North American 00:00:20.400 --> 00:00:26.400 market share for NVIDIA GPUs. With graphics cards being as coveted and expensive as they are, 00:00:26.400 --> 00:00:33.760 why the heck did EVGA decide to kill this seemingly golden goose? I mean, do they not like money? 00:00:34.560 --> 00:00:38.960 We reached out to EVGA to get some more details, but unsurprisingly, they didn't want to give 00:00:38.960 --> 00:00:43.120 more details other than the public statements they've already made. But still, we'd like to 00:00:43.120 --> 00:00:48.000 thank Jacob Freeman for sending us a rejection message that was nicer than anything I've ever 00:00:48.000 --> 00:00:52.880 gotten on Tinder. I've never been on Tinder, but that's John speaking. But the good news is, 00:00:52.880 --> 00:00:56.560 we're not totally in the dark about what's going on, so let's get started by pointing out 00:00:56.560 --> 00:01:01.520 the graphics card business actually isn't as lucrative as you might think it is. Despite the 00:01:01.520 --> 00:01:06.560 high prices for premium models and the high demand we saw during the pandemic, AIB partners, 00:01:06.560 --> 00:01:12.160 like EVGA, ASUS, Gigabyte, and many others, are usually only running profit margins somewhere 00:01:12.160 --> 00:01:17.760 between 5 and 10% on their graphics cards. After all, they have to pay lots of money to 00:01:17.760 --> 00:01:23.120 NVIDIA and AMD for the GPUs themselves. And a recent report indicated that despite the fact 00:01:23.120 --> 00:01:28.240 that EVGA has long been considered part of the upper echelon of graphics cards manufacturers 00:01:28.240 --> 00:01:34.000 in terms of support and overall quality, their margins actually lagged behind most of their 00:01:34.000 --> 00:01:40.000 competitors because they outsourced much of the actual manufacturing, meaning EVGA's operations 00:01:40.000 --> 00:01:45.520 mostly consisted of just engineering the cards while others physically assembled them. And 00:01:45.600 --> 00:01:50.880 although outsourcing is usually associated with cutting costs, it appears that in this case, 00:01:50.880 --> 00:01:57.680 EVGA sacrificed money for convenience and scale. And remember how we just mentioned EVGA's support? 00:01:57.680 --> 00:02:02.960 The company was rather generous with its warranty and repair policies, which was great for consumers, 00:02:02.960 --> 00:02:09.040 but also likely cut into the company's already narrow margins even further, especially as they 00:02:09.040 --> 00:02:13.280 didn't sell at the same volumes as some of their competitors, as many of these other companies have 00:02:13.280 --> 00:02:19.920 a more global reach and also sell AMD Radeon based cards. So this at least partially explains why 00:02:19.920 --> 00:02:25.760 EVGA is getting out of the graphics card business entirely, but not about the reported specific 00:02:25.760 --> 00:02:31.520 beefs they had with NVIDIA as a partner. Consumers won't be strangers to how NVIDIA's pricing is 00:02:31.520 --> 00:02:37.760 famously hard to predict, with announcement day MSRP's often differing significantly from projections 00:02:37.760 --> 00:02:43.760 by the tech media. But it might come as a surprise that AIB partners also find out official pricing 00:02:43.760 --> 00:02:48.880 around the same time as you and me at home do. And by then, the cards are already in production 00:02:48.880 --> 00:02:53.840 without the AIB partner even knowing how much money they owe NVIDIA. Not to mention that NVIDIA is 00:02:53.840 --> 00:02:59.440 rather strict about designs it allows AIB partners to create. And while it may help protect stability 00:02:59.440 --> 00:03:03.920 and consistency across the product lineup, regardless of who you buy your graphics card from, 00:03:03.920 --> 00:03:09.280 and may stop AIB's from designing something overly exotic that ends up not working well and 00:03:09.280 --> 00:03:15.440 hurting NVIDIA's reputation, it also hamstrings the AIB's ability to innovate and set themselves 00:03:15.440 --> 00:03:20.880 apart from each other. So while both sides seem to have valid concerns, at the end of the day, 00:03:20.880 --> 00:03:27.040 a smaller company like EVGA was taking huge losses on higher-end cards, especially as they compete 00:03:27.040 --> 00:03:31.520 against NVIDIA's own Founders Edition cards, which are the cheapest on the market, and the 00:03:31.600 --> 00:03:36.320 models that consumers who simply want a GPU without extra bells and whistles and dragon 00:03:36.320 --> 00:03:41.520 decals will gravitate towards. Needless to say, the opaque pricing and the fact that they were 00:03:41.520 --> 00:03:48.080 getting undercut by NVIDIA itself left EVGA feeling more than a little miffed, and left them without 00:03:48.080 --> 00:03:52.720 much of a reason to carry on with their graphics card business in the wake of both the crypto crash 00:03:52.720 --> 00:03:59.200 and the higher production costs, and thus even thinner margins, of the new RTX 4000 series. 00:03:59.200 --> 00:04:04.160 Unlike many of their competitors, which make both NVIDIA and AMD-based graphics cards, 00:04:04.160 --> 00:04:09.520 EVGA exclusively made GeForce products, so they don't have a radion lineup to fall back on, 00:04:09.520 --> 00:04:13.680 and even if they did, they'd still be facing the same issues we mentioned in the first half of 00:04:13.680 --> 00:04:18.640 this video. The good news for EVGA is that they have a successful power supply business that has 00:04:18.640 --> 00:04:23.840 much higher profit margins that the company reportedly plans to soldier on with. But if you 00:04:23.840 --> 00:04:29.680 had your heart set on a FTW love lace card for your next gaming rig, sadly, you're just gonna 00:04:29.680 --> 00:04:34.880 have to take the L. Hey, and thanks to you for taking this train all the way to the end of the 00:04:34.880 --> 00:04:39.120 video, the video train. Like the video if you liked it, dislike it if you disliked it, check out 00:04:39.120 --> 00:04:42.640 our other videos, comment below with video suggestions, and don't forget to subscribe 00:04:42.640 --> 00:04:47.600 and follow. I've talked to you so much about this, and frankly, I'm sick of it.